No-one would doubt that first-time buyers are the lifeblood of the market and a perusal of some recent data from the Council of Mortgage Lenders demonstrates how quickly things can change.
Not all the data is negative. Interest payments as a percentage of income have fallen from around 20% 12 months ago to slightly under 16% in January and the multiple of income required for the average first-time buyer has fallen from a little over 3.3 x to 3 x over the same period.
Not surprisingly, the average age and income has barely changed with the average first-time buyer remaining at 29 years old, typically earning around 33,000 – much the same as the past two years.
Key figures are those of the typical loan advance and percentage loan-to-value. The average advance peaked at 119,250 in July 2008 – widely thought to be the peak of the house price market – and the average percentage advance was 90%.
Since those giddy days the average first-time advance has fallen almost every month to 97,000 in January 2009. More importantly the average LTV has reduced to 76%.
This demonstrates the lack of appetite that lenders have for higher LTV lending and highlights that without greater lender involvement in providing finance for that first link in the chain, we are unlikely to see any real changes in activity any time soon.